Articles, Saving Money

7 Practical Tips to Save Money That Every Nonprofit Should Know

Written By: Eric Williams
Reviewed by: Mike Reyes
Last Updated June 16, 2022
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Nonprofits try to make this world better, but running one is hard. Apart from common issues that businesses face, like technological advancement, innovation, accounting, and regulatory requirements, nonprofits have their own challenges. One of the most common issues among nonprofits is running out of funds.

Saving money is more important for nonprofits than regular businesses because of the nature of their business. Nonprofits must have a budget and save money wherever possible while keeping overhead costs to a minimum.

This blog has tips for nonprofits to save money and bridge the gap between their vision and resources.

7 Surefire Ways for Nonprofits to Save Money 

According to one research piece, over one-third of nonprofits in the U.S are expected to close within two years due to financial losses caused by the viral pandemic. It emphasizes the need for nonprofits to save money now more than ever.

Cost-cutting ideas for nonprofits:

Take Advantage of Tax Refunds

The first and most basic way nonprofits save money is to take advantage of tax refunds whenever available. Many federal and state tax rules control the operations of charitable organizations. 

In the United States, nonprofit organizations classified as public charities, private foundations, and private operating foundations are eligible for federal tax exemption under Section 501(c)(3). Each state and nation has different tax exemption laws. To take advantage of the same, organizations must consult with a tax advisor or CPA (Certified Public Accountant)

Use Free Resources

Nonprofits must use free resources for day-to-day operations. There are several free resources accessible to nonprofits, both online and offline. Here’s a list of several completely free nonprofit resources:

  • G-Suite to access documents, drives, calendars, email, and other services.
  • Canva to produce images and visuals for both online and offline marketing.
  • Buffer to monitor and schedule social media posts.
  • MailChimp for email campaigns, lead generation, and retaining existing donors.
  • Slack to improve communication and cooperation among team members and volunteers.
  • Asana for assigning tasks, assessing performance, and keeping things organized.

Use Online Donation Software 

Online donation software is more than a fundraising platform. It helps nonprofits stay organized, become more efficient, increase donations and keep track of funds.

Online fundraising platforms allow nonprofits to communicate, track and manage their funds. They can increase donations by accepting funds in multiple currencies. The app also allows nonprofits to filter donors based on their donation amount, frequency, and much more. 

Here are a few benefits of online donation software:

  • Save time and cost from attending in-person events
  • Easy to create campaigns and accept global payments
  • Easy to track funds 
  • Improve interaction with donors
  • Create personalized campaigns based on donor information

Cut Down Office Expenses 

It is practically hard to eliminate costs, but cutting unnecessary expenses can help nonprofits enhance cash flow and save money. The strategic approach that any nonprofit should take to enhance revenue is to cut office expenses. They must examine their office expenses closely and eliminate any high costs.

Furthermore, nonprofits can ask staff to work remotely if they believe they do not require such vast office space. They can also use coworking spaces for meetings and other similar activities. When purchasing office supplies, companies must look for discounts and only buy what is essential. To reduce office expenditures to a minimum, they must use technology and automation whenever possible.

Retain Donors 

According to Double the Donation data, online monthly giving revenue increased by 40% as recurring donation choices became more popular with online contributors.

Accepting donations from existing donors is more valuable than contributions from new donors. Hence, retaining existing donors is the most effective strategy for nonprofits to save money. Why? Because it takes a lot of effort and time to find donors in the first place. And if nonprofits don’t want to waste their efforts, they should actively consider retaining donors.

Nonprofits looking to retain donors should invest in fundraising software that provides comprehensive data about their donors. Best fundraising software will help nonprofits understand their valuable donors and create personalized campaigns. The more they know their donors, the easier it gets to retain them.

Hire Volunteers And Contract Workers 

Nonprofit organizations serious about saving money should hire volunteers and contract workers. Why? Because it helps them save money over hiring full-time employees. Also, this is a win-win situation where volunteers and contract workers can develop skills and gain experience, and nonprofits can save money.

Nonprofits frequently seek people with certain skills and abilities. However, if they hire full-time employees, they may need to train them, whereas contract workers need not.

Diversify Revenue Sources 

Diversifying income sources is important for anybody looking to increase revenue and save more. In these unprecedented times, having multiple sources of income provides a sense of security and stability. More income resources will result in increased exposure and donations to nonprofits. Here are a few ideas for Nonprofits looking to diversify their funding sources:

  • Social media networking, as well as online and offline events.
  • Pursue corporate contributions since it will allow them to reach a larger audience.
  • Seek grants, but nonprofits must meet the requirements.
  • Rent out excess space to increase their organization’s earnings.
  • Use the peer-to-peer fundraising strategy to boost fundraising success and spread word of mouth.

FAQs (Frequently Asked Questions)

1. How Much Money Should a Nonprofit Keep in Savings?

Nonprofits should set aside at least 3-6 months of operational expenditures and maintain the cash reserve as a general rule. Nonprofits should ideally have up to two years’ operational expenditures in the bank.

2. What is a Good Nonprofit Operating Margin?

Nonprofit organizations should strive for an operational reserve ratio of at least 25%, or enough to cover at least three months of annual expenses.

3. What Percentage of a Nonprofit’s Budget Should be Spent on Programs?

The Better Business Bureau recommends that program costs, including salaries, account for at least 65 percent of overall nonprofit spending.

4. How Much Should Nonprofits Spend on Overhead?

Nonprofits should aim for an overhead rate of no more than 35%. A figure greater than this might suggest that an organization’s expenditure is out of proportion to its ability to generate funds.


The goal of nonprofit saving is not to increase profits but to create cash flow that may be spent for better purposes. Effective cash flow management enables nonprofits to achieve their goals and missions by ensuring financial security.

We’re sure the steps outlined above will help nonprofits save money and take their business to new heights. Apart from the steps above, organizations should also cultivate a  culture of accountability. Employees and management at all levels must work together to achieve the goal of saving. The real transformation will begin only when nonprofits start to save and realize how much more they can accomplish. 

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